How independence supporters could persuade Labour voters to support Brexit

David Green, 17 May 2016

About 60% of people who voted Labour in 2015 intend to vote to remain in the EU, compared with only about 30% of Conservatives. Labour voters appear to be impressed by their leader’s argument that the EU is all about the protection of workplace pay and conditions. And yet ‘social Europe’ is only a weak element of the EU package. The eurozone has produced high and long-term unemployment, especially among young people in countries such as Italy, Spain, Portugal and Greece.

The weakness of the Vote Leave campaign is that it gives the impression of wanting to be out of the EU in order to de-regulate. But when Labour voters hear de-regulation they think that their working conditions are going to be top of the list for the chop.

And yet, one of the striking features of the debate so far is that Vote Leave campaigners have been outspoken critics of the way in which the EU has become the compliant instrument of big business. Dan Hannan MEP has shown how big corporations lobby the EU to the disadvantage their rivals and cites the impact of ‘big pharma’ on small producers of natural medicines. James Dyson has shown how the EU stitched up the regulations to benefit German manufacturers of vacuum cleaners. And FT columnist Wolfgang Munchau, a remain supporter, has shown how the EU has been soft on German car manufacturers that fiddled their emissions results.

In the Telegraph this week Boris Johnson said the EU system of regulation was so opaque that big corporations could use it to maintain their oligarchic position and keep out competition. That was why the ‘FTSE100 fat cats’ want to remain: ‘they are getting personally richer and richer – by mainlining immigrant labour for their firms and manipulating EU regulation that only the big players can understand – while those at the bottom have seen a real terms fall in their wages.’

He urges us to leave for the sake of the grafters, but many Labour voters will not be convinced unless Vote Leave campaigners make it clear that their call for de-regulation does not mean scrapping all the workplace protections built up over the last 20 years.

Boris needs to give a bit more detail to win over the doubters and, as a potential future leader of the Tories, his commitments could carry as much conviction as any promises David Cameron might make.

In his article Boris Johnson advocated an ‘inclusive’ economic strategy, unlike the ‘extractive’ policy of the EU. There is an urgent need to build trust and Tory supporters of Vote Leave need to advocate some policies that symbolise and entrench inclusivity.

First, it would help to declare a truce on the reform of workplace regulation to make it clear that de-regulation does not mean making Labour conditions less secure. A promise to control immigration will help to improve bargaining power, but on its own will not be enough.

Second, Mr Johnson should promise full backing for a government-funded investment bank and symbolise consensus by creating an advisory board with TUC representation. Does this sound like a complete abandonment of commitment to free enterprise? It wouldn’t involve renouncing support for a market economy. In any event, no one would believe any such declaration. It does mean being willing to learn from the experience of other countries that allow a bigger role for state-backed investment. We need only look to the experience of the USA, the economically most successful nation ever, which has an extensive industrial policy designed to encourage American enterprise.

Since the 1950s the Small Business Administration (SBA) has supplied 20 million small businesses with financial help by supporting them when commercial banks would not. A small business is one with under 500 employees, which includes the vast majority of American companies. The SBA does not make loans direct to customers, but guarantees private loans against default. Our Government has already founded a British Business Bank. Its remit should be extended and its funding substantially increased.

Third, Mr Johnson could declare the whole country an enterprise zone, and abolish capital allowances so that all capital expenditure is a deductible business expense. The result would be that companies that make big investments would pay no corporation tax.

Fourth, Mr Johnson, should announce a contingency plan in case investment falls after exit. A cut in corporation tax to 10% would counteract any doubts businesses might have.

Far from fleeing to an economically stagnant eurozone, companies will be queueing up to invest in the UK, creating not low-paid, low-skill jobs suitable for migrant labour from poor countries, but high-skill, well-paid jobs for the committed citizens of a free land.

Mr Corbyn spent most of his life arguing that the ‘four freedoms’ of the EU are really the four shibboleths of free-market fundamentalism. Uncontrolled movement of labour creates winners and losers, with low-paid employees the chief losers. Many economists who are unstinting in their support for a market economy question uncontrolled immigration, including Cambridge University’s Professor Rowthorn and Oxford University’s Professor Collier. The unfettered movement of capital is also challenged by economists. The rapid movement of hot money in and out of fragile economies can do lasting harm to output and cause sudden bursts of unemployment.

The serious thinkers in economics are talking about sensible control of the movement of labour and capital, not declaring that any change whatsoever is ‘non-negotiable’. Such language does not belong in a free and democratic system that is open to new ideas and willing to learn from mistakes.